Loans for Startup Companies

We can give you several examples of great business ideas which never took off the launch pad in the absence of adequate funding. A successful start-up is a lot more than a team of professionals and business plans. It requires capital, a lot of it, or else things go downhill pretty quickly.  If you plan to start a new business, then initial funding should be your biggest concern. Numerous platforms specifically target startups from their deep pockets and valuable connections.

However, it is not easy to get in touch with these companies as there is a cut-throat competition among new businesses over capital accumulation. These companies are more than likely to use unfair means to get an edge over their competitors. Thus you should get prepared for the war you are about to get indulged in.

We have tailored a complete guide for less experienced entrepreneurs to save them from the horrors of a negative funding period.  Remember, in the world of business; you cannot afford to have a dull beginning.

Small scale start-ups issues

According to the National Business Association, almost seventy percent of startups needed funds and one in four had to sweat to access financing. Those who were not lucky enough to get capital were unable to increase supply and expand the company’s operations. Around thirteen percent of these startups had to fire their employees in the absence of salaries.

Small Business Administration found out that eight percent of small scale startups depended on bank loans while two percent benefited from a business credit card. Nearly fifty-seven percent used their savings whereas eight percent took back up from their credit card, three percent from home equity and six percent relied on other options.

Small scale start-ups funding basics

Small business cannot look forward to work like established companies. Normally, they fail to get funding due to their poor credit, no business financial history, and zero cash flow. You are bound to roll back on personal money to fund your company initially even if you confident about securing future investment.

But, in case the business fails, you will be personally liable to pay off the debt on your own. It will probably damage your credit score, despite declaring bankruptcy, and your personal assets will be confiscated.  Always have a plan for full repayment irrespective of your venture’s output.

Loan options available for startups

Personal loans

You can borrow money on your liability from national banks, credit unions, small community banks, and online lenders. Personal loans are given on credit score and financial history. Thus you can start any business you like. Generally, people with good credit details pay lower interest rates compared to a business loan. An amount as low as $5,000 will give your business a kick start, and you will also have clarity about monthly payments and duration of the debt.

Business loans

Certain online lenders, credit unions and traditional banks provide loans specifically for business purposes. You can borrow bigger checks through business loans, especially if you have long term goals for your business.  Not to mention, business loans are not subjected to be added as a part of personal financial success. However, in case of the failure, you can be marked liable for the loss.

SBA loans

In the name of SBA, you will be granted funding by microlenders, partner lenders and development organizations. SBA makes sure that small businesses get adequate loans amounts and also minimizes the risk shared by the lenders. You can apply for either smaller or larger amounts given that the funds are a legitimate demand. Entrepreneurs turn towards SBA loans even when their requests are sidelined by commercial banks. However, you must complete the strict requirements to qualify for SBA support.

Credit cards

Personal or business credit cards can be easily used to cover bigger purchases and regular operating expenses. A business credit card can also be used for developing a solid credit history by paying bills on time. Still, you must have an excellent personal financial history to obtain a credit card in the name of your business.

Conclusion

You can use one or all of these methods to obtain the required money for business operations. But double-check your ability to manage numerous funding platforms before asking for funds.